Earlier quoted context omitted.
I got better than anything else I could have invested in. That's what matters to me.
You did that over a period that was a decidedly bull market, though. Presumably sokoloff's question was intended to point out that very similar strategies (trying to pick "winners") is likely to underperform the market in bear conditions, sometimes very badly. I knew a lot of people who thought they were hot stuff day traders back in 1998 too. Spoiler: they weren't.
This 4×6 index card has all the financial advice you’ll ever need
251–260 of 264 posts
Re: This 4×6 index card has all the financial advice you’ll ever need
#252Earlier quoted context omitted.
Wouldn't save 20% of your income cover that? It's just a management detail after that (i.e. leave some of that 20% liquid for emergencies).
I said you should have enough liquidity to get you through a year-long crisis. If you're saving 20% of your income, you're probably. However, unless you have especially nasty rates on student loans, paying them off shouldn't come before accumulating some fairly liquid savings. The same probably goes for paying extra on the principal on your mortgage and maxing out retirement plans.
Re: This 4×6 index card has all the financial advice you’ll ever need
#253Earlier quoted context omitted.
It's different than REIT, not necessarily universally "good". One obvious difference is with a house you get a collateral for a huge low-cost leverage, that in some cases might be easier to settle if things go South (e.g. shortsale). Another one is rent you save/collect from someone else.
To me, rent just seems like a form of dividend payment, which is of course not unique to property ownership.
Renting is a good investment if you can handle sourcing tenants and outsourcing or handling maintenance issues.
Re: This 4×6 index card has all the financial advice you’ll ever need
#254Earlier quoted context omitted.
That's not being poor. Try earning federal minimum wage and providing for 2-3 people. You cut the crap out early. But your car that you need to get to work still breaks down. Your SNAP (don't know what they are? you've never been poor) benefits still run out too soon. And you and your kids still get sick.
That notwithstanding, what advice would you naysayers like to see on this card for poor people? Is there anything that simply knowing is going to help them? This card contains all the major points of advice a poor person can use about finance. Whether that is enough to save them is a completely different question. Raising it is not a valid criticism of this card.
#1 Convince all the rich people to do the last item on the card from the original article
#2 Try to get your kids to do something different than you, if you're earning $20k/year with no savings, no spouse and have kids it's probably too late for you to save anyway
Re: This 4×6 index card has all the financial advice you’ll ever need
#255Earlier quoted context omitted.
Budget to save before you outlay your discretionary income. You might have to redefine discretionary to include car (if public transport suffices for your job), cable, etc. Don't lay out your budget and set aside $x for entertainment (eating out, etc). Savings will always suffer. Set aside desired savings first and then work with what's left.
Hear hear. I can't repeat this point enough. You have to force yourself to save, first. If you spend on everything else first and figure you'll save "the rest", something will always come up. If you set it aside before other categories, it will ... be set aside! As a corollary, just writing (and following) a basic budget does wonders. I've talked to a lot of people who said it was like getting a raise. You have regul…
Re: This 4×6 index card has all the financial advice you’ll ever need
#256Almost all of this is excellent advice, except for one point: "save 20% of your money". That's a bare minimum, which will let you retire after about 37 years of working. Bump it to 35% and you'll retire after 25 years. Bump it to 50% and retire in 17. Bump it to two-thirds and retire in 10 years. That's one of the most important factors in your personal finances: not how much you make off your investments, not whethe…
If I retired, I would just find another job or career to make stuff.
Re: This 4×6 index card has all the financial advice you’ll ever need
#257Earlier quoted context omitted.
The math is covered here: http://earlyretirementextreme.com/ Basically the thought is that 20-25 years of living expenses will generate enough income for you to early retire on. If you make 100k (post tax) with a 20% savings rate, you save 20k, and have living expenses of 80k. Ignoring future compound growth, for each year you work, you save 1/4 a year of living expenses. If you go the other extreme, and have 66% sav…
I'll have to read the book for more but the math you explain seems incomplete. The earlier I retire, the more would be my expected number of years in retirement (assuming a given life expectancy). If in one scenario my retirement is 40 years away and I need to save for 20 more years, then in he other scenario where I retire in ten years, I need to save for fifty! That's a factor of 2.5 in this example! Ignoring growt…
So if you have 25 years of living expenses and each year take out 1 year of living expenses, that is 4% of your money. If you earn ~4% a year then your account balance stays the same.
The 4% number matches the 4% rule: http://www.investopedia.com/terms/f/four-percent-rule.asp
Of course after the great recession now the common wisdom is that the 4% rule can't be trusted: http://online.wsj.com/article/SB1000142412788732416230457830...
Personally I think it would be foolish to plan on retiring with only 20 years of living expenses. However some people also plan on holding a part time job at least in early retirement.
Re: This 4×6 index card has all the financial advice you’ll ever need
#258Earlier quoted context omitted.
"When you're talking about being retired for fifty years" Yeah. We aren't. This whole thread spawned because the claim was that you can retire in 10 years if you save 66% of your income.
>Yeah. We aren't. This whole thread spawned because the claim was that you can retire in 10 years if you save 66% of your income. I don't understand. Retiring after 10 years means you'll be retired for around 50 years, doesn't it?
It's why real-life retired people don't put their entire savings in the stock market. Retirement funds tend to have most of your money in fixed-rate securities by the time you actually quit working.
Re: This 4×6 index card has all the financial advice you’ll ever need
#259Almost all of this is excellent advice, except for one point: "save 20% of your money". That's a bare minimum, which will let you retire after about 37 years of working. Bump it to 35% and you'll retire after 25 years. Bump it to 50% and retire in 17. Bump it to two-thirds and retire in 10 years. That's one of the most important factors in your personal finances: not how much you make off your investments, not whethe…
Why would you want to retire in 10 years? Isn't that like saying you hate your work? I enjoy my work, and am working to make it more enjoyable. The idea that I would try to live like a pauper so I could retire in 10 years and not do anything seems kind of strange. If I retired, I would just find another job or career to make stuff.
Re: This 4×6 index card has all the financial advice you’ll ever need
#260Earlier quoted context omitted.
> Bump it to two-thirds and retire in 10 years. Expand it by 100 and you would be already retired before you would were even born! I guess the point of the advice is to be realistic. > The only more important factor is "never borrow money", and in particular "never carry a balance on a credit card". Well, lots of people have started companies or saved themselves from starvation by maxing a credit card.
The idea that >20% savings rates are not "realistic" is a serious mindset problem. Almost anyone on Hacker News with a paying job (i.e. not an early-stage no-funding startup) should easily be able to save much more than that. Sure, saving two-thirds of your income might be out of reach, and even the 20% advice is better than most sites that often say 5-10%, but consider carefully whether you can increase it and retir…
You know that 50% or so of HN readers are not in the US, right? Some have to do with $300-$1000 a month (or less), with the same costs for food and costlier computers, clothes etc -- oh, and 3x the price of gas. And renting some small-ish appartment.